MKTG 360 Exam 3
Global Marketing Cont.
-Access to new markets -Gain scale economies -Access lower costs -Offset domestic cycles -Enhance brand image -Overcome trade barriers -Access foreign investment Buick sold over 550,000 cars, more than triple its sales in the United States
A broader perspective on marketing
-Consumer culture -Marketing and the law -Corporate social responsibility
Examples of Marketing-Related Personality Traits
-Dogmatism: open/closed mindedness -Self-monitoring: ability to look to others for clues on how to behave -Need for cognition: Pleasure from thinking -Innovativeness: Have to have latest -Materialism: Need to possess -Compulsive consumption: Have to spend it -Variety/Novelty seeking: Different experiences
5- Step Decision-Making Process
-Evoked Set Model -Consumer decision strategies Compensatory vs. Non- compensatory Multi-attribute, conjunctive, lexicographic Make sure you can tell which choice is made with each of the decision models -Cognitive Dissonance
Marketing and the Law
-False Advertising -Product Safety -Nutritional Labeling -Consumer Privacy -Fairness in Lending -Deceptive Pricing Ex: FDA inspecting foods
Executing the Message Cont..
-Humor Ex: Drinking all the beer, revolving door
CRM: Recency-Frequency-Monetary Analysis
-Identifies customers most likely to purchase again -Identifies and ranks "best customers" -Identifies most profitable customers Lifetime value of a customer
1. Multi-Attribute
-List outcomes, rate each outcome on importance -How strong is belief that each alternative can meet outcome -Weighted total derived by multiplying importance rating by your evaluation Determine weighted total for each option by multiplying the importance rating by attribute evaluation and summing For Bali: (5x3) + (10x3) +(4x-3) +(3x-1) +(7x2) +(1x2) = 46 Hawaii = 49 Europe = 26 Alaska = 22 CHOICE: Hawaii
Executing the Message Cont.
-Music -Scientific evidence -Technical Expertise Ex: Intel noise, double double mint song for gum
Advertising and Market Share
-New brands with a small market share spend proportionally more for advertising and sales promotion than those with a large market share -Beyond a certain level of spending, diminishing returns set in -New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits
2. Differentiated
A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each. Advantages: Greater financial success Economies of scale Disadvantages: High costs Cannibalization Ex: Lays baked, Lays Classic
3. Niche Marketing
A strategy used to select one segment of a market for targeting marketing efforts. Advantages: Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning Disadvantages: Segments too small, or changing Large competitors may market to niche segment Only one small group we are interested in selling to.
Direct Investment (Entering the global marketplace)
Active ownership of a foreign company/manufacturing facility. Ex: Giardino is owned by McDonald's. FCA= Fiat Chrysler Automobiles
Creative Decisions in Advertising
Advertising Campaign: A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals Ex: Got milk?
Advertising
Advertising is the paid, nonpersonal communication of a marketing message by an identified sponsor through mass media. Ex: McIlhenny Company (Tabasco) Ads
Sales promotion Cont.
Advertising--> Reason to buy Sales Promotion--> Incentive to buy Sales promotions impact behavior, not attitudes
Marketing and the Law Cont.
Advertising: Wheeler-Lea Amendment to FTC Act (1938) Children's Television Act (1990) Deceptive Pricing: Sherman Antitrust Act (1890) Robinson-Patman Act (1936) Product Safety: Food and Drug Act (1906) National Traffic and Motor Vehicle Safety Act (1966) Consumer Privacy: National Do Not Call Registry (2003) Fairness in Lending: Consumer Credit Protection Act (1968) Fair Credit Reporting Act (1970)
Attribution Theory
Affects our CS/D in terms of: -Stability - happen often? Temporary? -Focus - internal/external -Controllability - could something have been done to prevent this? Ex: Ikea, you build it yourself. When you don't follow instructions they blame IKEA, but when you build it you feel proud.
1. Demographic Segmentation
Age, family size, family life cycle, occupation, ethnicity Gender Income
Evoked Set Model
All Brands: Known Brands +Unknown Brands Known Brands: -Unacceptable, acceptable (purchased brand, rejected brands), overlooked
Branded Entertainment
Also known as Product Placement The integration of brands or brand messages into entertainment media Movies 1927, "Wings" - Hershey's 1982, E.T. TV Shows Video Games 50 Cent; Sports games For more search "A brief History of Conspicuous Product Placement in Movies." Ex: Nissan's horrible product placement. Pepi's ad about sponsorship while. 30 Rock
Cost Per Thousand (CPM)
An advertisement costs $4,000 and generates 120,000 impressions. What is the CPM? $4,000/$120,000 X 1000 =.0333 X 1000 = $33.33
Marketing Management Tasks
Art and science of segmenting and targeting markets, determine positioning Capture consumer insights (Power of We) Design the Right Product Deliver and communicate value Build strong brands
Retrieval
As marketers we can affect retrieval by: -Characteristics of the stimulus -Congruency (Healthy choice/green) -von Restorff effect (stands out) If goal is rapid awareness of product, then high frequency of ads over a short period of time Ex: We remember blue better. Blue=Clean (Congruency) Ex: Von restorff- stands out like a sore thumb. Purple ketchup
Advertising Sales/Response Functions
Assumptions: Sales are the principal objective of advertising and/or promotion Sales are the result of advertising and promotion and nothing else
High Effort Processing
Attitudes based on: beliefs/schema associations evaluation of these beliefs (e.g. we believe it to be of good quality and this is important to us; resulting in a positive attitude)
Identify Product Benefits
Attribute: "Powerade's new line has been reformulated to combine the scientific benefits of sports drinks with B vitamins and to speed up energy metabolism." Benefit: "So, you'll satisfy your thirst with a great-tasting drink that will power you throughout the day."
Steps in Media Selection
Audience Profile (STP, Budget, & Objectives) Media Plan Buy & Place Media Evaluate Media Plan
Executing the Message
Common Executional Styles
Integrated Marketing Communications
Carefully coordinating all promotional messages to assure the consistency at every touchpoint between a company and the consumer. Ex: Omega Watches (Spectre commercial) Print ads match, website matches, movie ad matches.
Repositioning
Changing consumers' perceptions of a brand in relation to competing brands. Ex: Malboro cigarettes
Consumer Decision Strategies
Compensatory Models Cost-benefit analysis Which one does the +'s most outweigh the -'s? Non-Compensatory Models Immediate rejection based on some factor
Attitudes
Consistent response toward an object Enduring evaluation of ... Amount of affect or feeling for or against a stimulus One dimensional: +/-
Information Search
Depends on: How much information you have Ease of obtaining information Value you place on information
Consumer Behavior Definition
Describes how consumers make purchase decisions and how they use and dispose of the purchased goods and services. It includes factors that influence purchase decisions. Ex: Panera pay what you want, people actually paid more due to peer pressure. People didn't go back. Burger king- "Satisfries"
Marketing Research Cont.
Descriptive: Gathering and presenting factual statements Diagnostic: Explaining data Predictive: Attempting to estimate the results of a planned marketing decision
Reference Groups
Direct: -Primary: Family, friends, co-workers - Secondary: Clubs, professional, and religious groups Indirect: -Aspirational: "I want to be like Mike" -Non-aspirational: "If i buy one of those cars people will think..."
AIDA Concept
Model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message.
Selective Attention (Selective perception)
Selective Attention: -Occurs when the consumer chooses to focus attention on certain stimuli while excluding others. Ex: Watching T.V. while on your laptop and on your phone. Commercials are louder, brighter, and faster
Selective Comprehension (Selective perception)
Selective Comprehension: -Interpreting information on the basis of their own attitudes, beliefs, motives, and experiences. Ex: Consistency in the message...
Selective Exposure (Selective perception)
Selective Exposure: -Occurs as consumers choose whether or not to make themselves available to the information. Ex: hear no evil, see no evil, speak no evil
Selective Retention (Selective perception)
Selective Retention: -Consumers do not remember all the information they see, hear, or read even after attending to and comprehending it. Ex: repetition, seeing the same ad several times on different TV channels
Targeting
The process of evaluating the various segments and then selecting the most viable segment or segments for your product
4. Needs Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product.
Marketing Research
The systemic design, collection, analysis, and reporting of information to help marketers solve specific marketing problems or take advantage of marketing opportunities
High Effort Processing Cont.
Theory of Reasoned Action: Can I predict your behavior based on your beliefs and normative influences? Also called the Behavioral Intentions Model Best for central route processing.**** Works best in situations where product knowledge is high.
3. Lexicographic Rule
-Rank the attributes in order of importance -Find the brand(s) that is best on the most important attribute -If there is a tie, then find the brand(s) among the survivors of the first round that is best on the second most important attribute -Continue until you have one winner "Best on most important attribute" Best on most important attribute: Tie between all four on most important attribute ("neat things to do") Alaska is best on second most important attribute ("wife wants to go") CHOICE: Alaska
Unique Selling Proposition
A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Ex: Audi Billboard. "Your move, BMW".
The Marketing Mix
A group of marketing variables that a business controls with the intent of implementing a marketing strategy directed at a specific target market. Promotion, Place, Price, Product Ex: Timex vs Rolex
Do we know what we want?
A lot of times, people don't know what they want until you show it to them. - Steve Jobs
Perceptual Mapping
A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers' minds. *Perception of quality or perception of performance
Marketing Communication Process
the way in which a sender encodes a marketing idea and conveys it through message and medium so receivers can decode and understand it, and then respond with feedback. Ex: Can be a disaster, Kendall Pepsi ad.
The Value of a Customer
80% of Profits 20% of Customers 20% of Profits 60% of Customers No Profits (loss) 20% of Customers
Multinational Corporation
A company that is heavily engaged in international trade, beyond exporting and importing
Developing a global vision
"The new trade routes of the 21st century are laser flashes and satellite beams. The cargo is not silk or spices, but technology, information, and ideas." Coca-Cola started the trade with China
Selling is only the tip of the iceberg
"There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available." Peter Drucker
Pabst Blue Ribbon: China's real specialty beer
"We just produced China's first real specialty beer, an all-malt, reddish brown strong (15.7 plato) ale, dry hopped with Cascade (38 IBU) and aged in new uncharred American whiskey barrels" $46.99 for a bottle
A market is...
(1) people or organizations with (2) needs or wants, and with (3) the ability and (4) the willingness to buy A group of people that lacks any one of these characteristics is not a market.
Postpurchase Evaluation
*Cognitive Dissonance: Discomfort caused by purchase decision Low satisfaction, product returns Graph: Purchase point, successful dissonance resolution
TV Audience Measures*
*Program Rating Rating = (HH turned to show)/(Total U.S. HH with a TV) Share of Audience Share =(HH tuned to show)/(U.S. HH watching TV)
2. Conjunctive Rule
-Set minimum standards for one or more attributes -Reject any brands that do not meet ALL minimum thresholds -"And" rule: must meet standards for this attribute and the second attribute and the third attribute... Set minimum standards/cutoffs for one or more attributes; reject any brands that do not meet ALL minimum thresholds ("And" rule) CHOICE: Europe as it is the only option that meets/exceeds all six MINIMUM CUTOFFS Bali is not inexpensive enough and fails in accommodations Hawaii is not inexpensive enough Alaska fails on three of the six attributes
Alternative Advertising
-Social Networks Ex: Book a hotel room -QR Codes
Consumer Culture
-Sum total of learned beliefs, values, and customs that serve to direct the consumer behavior of members of a particular society -Customs Overt modes of behavior for specific situations -Language, rituals, and symbols -Sharing of Culture Ex: Obamacare, RedSkins, NRA
Importance of Customer Satisfaction
-The average business loses 10% of its customers each year -Acquisition of customers can cost 5 times more than retaining current customers -Improving customer retention by 2 percent can decrease costs by as much as 10 percent -The customer profit rate increases over the life of a retained customer
Personality
-The consistent patterns of behavior that people show with regard to social situations (e.g. cognitive style) -Personality refers to the internal characteristics; lifestyle refers to the external characteristics of how one lives -Image congruence hypothesis: states that the consumer selects products and stores that correspond to their self-concept
Advertising Cont.
-Top 200 brands account for 37 percent of media spending -The advertising industry is small - only 12,000 employed in advertising agencies -Ad budgets of some exceed over $4 billion per year - over $10 million per day!
Bases for Segmentation
1. Demographics 2. Psychographics 3. Behavioral 4. Needs
Public Relations Cont.
1. Gauge public opinion 2. Establish dialogue 3. Enhance company image 4. Build/rebuild trust 5. Build on marketing efforts Ex: BP CEO Tony Hayward
Long-Term Allocations of Promotions
10-40%: Trade Promotions 50-70%: Media Advertising 80-100%: Consumer Promotions
Is Advertising Necessary?
2 year recession study: -Across all major American industries -Firms that did not cut back sold 50% more than those that did cut back during the recession and sold 60% more in the 2 years following the recession
Theory of Reasoned Action Cont.
B= BI = (Aact) + (SN) (Aact) = (belief about consequences (bi)) x (evaluation of consequences (ei)) Take the sum of all these (bi) x (ei) to get (Aact) B= BI = (Aact) + (SN) (SN) = (belief of important people (NBj)) x (motivation to comply (MCj)) Take the sum of all these (NBj) x (MCj) to get (SN)
Selecting a Position
Be Affordable to Target Valued Benefit for Target, Difficult to Copy Be Distinct from competitors, easily communicated, profitable.
Theory of Reasoned Action
Behavior (B) results from the formation of specific intentions to behave (BI) TORA predicts BI, not B; based on one's attitude toward the act (Aact) and the influence of others' opinions—called subjective norms (SN)
Instrumental (Operant) Conditioning Process
Behavior (consumer uses product or service) Positive or negative consequences occur from use of product, leading to reward or punishment Increase or decrease in probability of repeat behavior (purchase)
Personality of Color
Blue: Respect, authority Yellow: Novelty, caution - eye-catching Green: Secure, natural - Canada Dry Red: Hot, strong - food smells better Orange: Powerful, informal - bright Brown: Relaxed, masculine White: Purity, goodness - Low calories Black: Power, mystery - high-tech Silver/gold platinum: Wealthy, stately - premium priced
Purchase Decision
Brand to purchase selected, but not bought Choice can still be altered: Opinion of others (family, salesperson) Unexpected: (price higher/lower, out of stock)
BRIC Countries
Brazil, Russia, India, China S- Used to be south africa 33% of world economic growth from 2000-2009 25% of the world's land mass 40% of the world's population
Poorly conducted STP Marketing
Buick ended their nine-year endorsement relationship with Tiger Woods, saving GM $7 million GM hoped to reduce the age of Buick buyers by aligning the brand with the youthful golfer The average age of Buick purchasers in 2008 was 68, the same as in 1997 Sales of Buicks plunged 58% from 1999 to 2007, and fell an additional 24% in 2008
3. Evaluation of Alternatives
Consumers use criteria to evaluate alternatives Criteria are based on internal and external information search and might not be equally weighted
Media Scheduling
Continuous Media Schedule: Advertising is run steadily throughout the period. Flighted Media Schedule: Advertising is run heavily every other month or every two weeks. Pulsing Media Schedule: Advertising combines continuous scheduling with flighting. Seasonal Media Schedule: Advertising is run only when the product is likely to be used.
Corporate Social Responsibility
Corporate Social Responsibility: Foster Trust Do No Harm Embrace Ethical Value
Media Selection Considerations Cont.
Cost per Contact: the cost of reaching one member of the target market Reach: the number of target consumers exposed to a commercial at least once during a time period Frequency: the number of times an individual is exposed to a message during a time period Audience Selectivity: the ability of an advertising medium to reach a precisely defined market
Super Bowl (2015)
Cost per thousand (CPM) CPM= ($4.5 million)/(114 million) X 1000 =$39.47 People tune into the Superbowl just to watch ads.
Cost Per Contact
Cost per thousand (CPM) CPM= (cost of ad space, absolute cost)/(Impressions) X 1,000
1. Social Influences
Culture--> Subculture--> Global--> Group (reference groups opinion leaders)-->social class (reference groups opinion leaders)--> gender roles--> Family
Cost Per Thousand (CPM) Practice
HH Tuned to show= Rating * Total U.S. HH With a TV HH Tuned to show= .10 (rating) * 100,000 (people who own a TV) =10,000 ("impressions") CPM= $5,000/10,000 X 1,000 =$500 per 1,000
3. Behvaioral Segmentation
Dividing a market by the amount of product bought or consumed. 80 / 20 Principle 20 percent of all customers generate 80 percent of the demand Ex: Burger King
Joint Venture (Entering the global marketplace)
Domestic firm buys/joins a foreign company to create new entity. Ex: GM partnered with Shanghai GM to sell in China
Marketing Perspective
Drive product/solution development "People don't buy products... they buy SOLUTIONS to problems" -Ted Levitt Need to find out WHAT problems people have today... and then SOLVE
Persuasive Promotion (Goals and Tasks of Promotion)
Encourage brand switching Change customers' perceptions of product attributes Influence immediate buying decision Persuade customers to call Ex: Switch to T-Mobile from Verizon and save 70% on your wireless service
Marketing and Society
Encourages consumption Embellishes Claims Environment - Marketing + Non-profit Societal Change Products Satisfy Needs Offer Access to Products Ex: United Colors of Benetton (having world leaders making out) Ray-Ban Never Hide Gillette: Holding men accountable (They want to sell more razors)
Consumer Culture Cont.
Enculturation: Learning your own culture Acculturation: Learning a new/foreign culture Theory of Reasoned Action example Reverse Acculturation: Home society impacted by other cultures Food: Local tastes Differences from where you're from Ex: Project Implicit (find out your biases) Tailgating, Thanksgiving, Fireworks, 2nd Amendment, Freedom of Speech
Institutional Advertising (Major Types of Advertising)
Enhances a company's image rather than promotes a particular product. Ex: General Motors
Objective and Task Method
Establish Objectives (create awareness of new product among 20 percent of target market) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Estimate Costs Associated with Tasks (create awareness of new product among 20 percent of target market)
Event Creation (Alternative Advertising)
Event Creation -Designing an event that features sponsorship Ex: Redbull creates an entire event just to advertise.
Evaluation of Alternatives
Evoked Set: a subset of all the alternatives (brands, products, or services) that the consumer thinks can solve a consumption problem or satisfy a need Ex: RC, Jones, Coca-Cola, Pepsi, BIG
Message Recall and Presentation Order
Ex: We remember things at the beginning and at the end. That's why it costs more to run ads right at the beginning of commercials and end.
Export: (Entering the Global Marketplace)
Export: Sell domestically produced products to buyers in other countries. Ex: Caterpillar construction devices
Global Marketing can be a disaster
HSBC Bank "Assume Nothing" campaign was translated in many countries as "Do Nothing." Coors "Turn It Loose" campaign to Spain translated into Spanish as an expression that's commonly interpreted as "Suffer from diarrhea." Electrolux Comes to the USA with the tagline..."Nothing sucks like an Electrolux." Cloning American products.
Information Search Cont.
External Search: -Personal sources Friends, relatives, co-workers. Marketer Controlled sources: -Information from advertising, salespeople, or point of purchase displays and the internet. Public sources: -Articles in magazines or newspapers and reports on TV. Personal Experience: -The actual handling, examining, or testing of the product.
Chapter 7- Consumer Behavior
Factors Influencing Purchase -Social/reference groups -Personal influences-lifestyle/personality -Psychological -Situational Theory of Reasoned Action -Beliefs and attitudes -Central-route/peripheral-route processing -Internal/external components -Relationship of TORA variables
Ethical Issues in Advertising
False Testimonials Bait-and-Switch Advertising Misleading Demonstrations -Campbell's Soup Puffery -Tropicana
Fantasy
Fantasy: The use of the product creates a fantasy for the viewer. Ex: Nissan, touches the car and goes through a crazy experience
Do we know what we want? Cont.
Feature Preferences Change throughout ownership. Feature Fatigue Want products with lots of options before purchase. Prefer products with fewer options after purchase. Feature Apprehension Want experiences with fewer activities before purchase. Prefer experiences with many activities after purchase. Ex: People tend to choose a product with more functions, but end up being more satisfied by the simpler one
Perceptual Organization
Figure and ground Grouping Closure -Zeigernik effect -A person beginning a task needs to complete it -When one is prevented from doing so, a state of tension is created that manifests itself in improved memory for the incomplete task Ex: Lybron James never finishing the dunk, always in the air. You remember this better
Hungry?
Grocery shopping when hungry (you end up with more junk food) Cinnabon designed their oven to push out the scent. Monsanto
Guerilla Marketing (Alternative Advertising)
Guerilla Marketing -Unconventional promotions on a very low budget -Generally thought of as for small businesses/ entrepreneurs -Zoo York
Stealth Marketing (Alternative Advertising)
Guerilla Marketing...cont. Stealth Marketing -Undercover marketing or roach baiting Ex: Kit-Kat Bench, Mr. Clean side-walk. Security glass, put money between it.
Viral Marketing (Alternative Advertising)
Guerilla Marketing...cont. Viral Marketing -Creating content that encourages users/customers to do your marketing for you -Blendtec -Doritos
Experiential Marketing
How can we make something an experience? Connect with the consumer Provide the consumer with a total product experience that considers all the elements in an offering that encourage or inhibit consumers' interaction with the product
Integrated Marketing Communication
IMC AIDA Concept Marketing Communication Process Goals and Tasks of Promotion Marketing Communication Tools Media Selection Media Optimization
Attitude Formation
If highly motivated/involved (effort), people likely use central-route processing When you consider the strength of the argument. If not, peripheral-route processing is used When you form an attitude based on something other than the strength of the argument.
Importance of Attitudes
Impact all parts of the mind Cognitive - guide our thoughts Affective - influence our feelings Conative - affect our actions Serve as ego-defense mechanisms Value-expressive (self-identity)
Determinants of Social Class
Income Occupation Education Language Location Possessions Family
Basic Principle of Marginal Analysis
Increase Spending . . . IF: The increased cost is less than the incremental (marginal) return. Decrease Spending . . . IF: The increased cost is more than the incremental (marginal) return. Hold Spending Level. . . IF: The increased cost is equal to the incremental (marginal) return.
Informative Promotion (Goals and Tasks of Promotion)
Increase awareness Explain how product works Suggest new uses Build company image Ex: 3D T.V.
Good Marketing Makes the Offering (Product or Service)
Inelastic when the price goes up. Elastic when the price goes down. Ex: Apple, Tiffany & Co., Oreo
Goals and Tasks of Promotion
Informing: PLC Stages (Introduction, Early Growth) Persuading: PLC Stages (Growth, Maturity) Reminding: PLC Stages (Maturity)
Marketing is all about...
Knowing and *connecting* with your core customer and cultivating relationships Developing your brand Solving customer problems
Licensing (Entering the Global Marketplace)
Legal process allowing use of manufacturing/patents/knowledge. Ex: Coke in Arabic language Fanta in Arabic, 7-up
Firing Customers
Lemon Law Buyback (3 new car, in 3 years) 3 strikes Please go somewhere else, we don't want your business. We are not going sell you anything.
Marketing Communication Tools
Level of Control: Low Word of Mouth Public Relations Personal Selling Sales Promotion Advertising Direct Marketing High
Factors Influencing Complaint Behavior
Level of dissatisfaction of the consumer Attitude/personality of the consumer toward complaining Amount of benefit to be gained Attributions Customer is king? In 2007, Sprint fired 1,000 customers for being "problematic" These customers called an average of 90 times per month, often as much as 12 times a day, demanding credit to their account
Lifestyle
Lifestyle: Shows how a product relates to the lifestyle of the target market. Ex: NFL, phone ad (samsung)
Marketing Orientation
Market Orientation: A customer-centric focus on the market environment Acquire Market Information--> Assess Information--> Respond (Adjust 4 P'S)
Lifetime Value of a Customer
Market Sales Potential = Measured as the number of buyers (b) x the quantity purchased in a given time period (q) x the price/unit (p) Lifetime value of a customer = q x p Embassy Suites Hotel 3 nights/month at $100/night = $300/month $300 x 12 months/year = $3,600/yr 30 years x $3,600 = $108,000
Market Segmentation
Market Segmentation is the division of consumer markets into meaningful and distinct groups
Perceptions
Marketers want to know: -How consumers sense external information -How they select and use sources of information -How information is interpreted and given meaning Perception: -The process by which an individual receives, selects, organizes and interprets information to create a meaningful picture of the world. Sensation: -The immediate, direct response of the senses (taste, smell, sight, touch, and hearing) to a stimulus such as an ad, package, brand name, or point of purchase display.
1. Undifferentiated
Marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix. Ex: Henry Ford with the Model T Advantages: Potential savings on production and marketing costs Disadvantages: Unimaginative product offerings Company more susceptible to competition
1. Need Recognition
Marketing helps consumers recognize an imbalance between present status and preferred state Present state = Actual state Preferred state = Ideal state Can we as marketers create a different ideal state?
The Importance of Market Segmentation
Markets have a variety of product needs and preferences Marketers can better define customer needs Decision makers can define objectives and allocate resources more accurately One word: Competitiveadvantage
Evaluate Media Plan
Media Optimization: is the adjustment of media plans to maximize their performance.
Media Planning and Placement
Media Planner Media Flowchart Frequency X Reach= Gross Rating Point
Media Scheduling Methods
Media Scheduling Methods
Media Selection Considerations
Media: -Efficiency -Clutter -Impact -Engagement
Mood of Image
Mood or Image: Ads using this style build an image (or mood) around a product such as peace or love. Ex: No one I'd rather lean on. Diamond ring ad. For your one true love.
Ethical Development Levels
More Childlike: Preconventional Morality: Based on what will be punished or rewarded Self-centered, calculating, selfish Conventional Morality: Moves toward the expectations of society Concerned over legality and the opinion of others Postconventional Morality: Concern about how they judge themselves Concern if it is right in the long run More Mature:
4. Psychological Influences
Motivation Attitudes/Beliefs Learning
Customer Satisfaction
Negative: Dissatisfied Defect Neutral: Satisfied Switchable Positive: Delighted Loyal Highly effective service recovery can result in higher levels of customer satisfaction than in cases where a service failure did not exist
Public Relations Cont..
New Product Publicity Crisis Management Consumer Education Event/Issue Sponsorship Press Relations Internet Web Sites
Car Color Names
Nissan Altima: Pearl White Java Metallic Brilliant Silver Saharan Stone Gun Metallic Super Black Cayenne Red Storm Blue Honda Accord: White Orchid Pearl Hematite Metallic Alabaster Silver Metallic Champagne Frost Pearl Modern Steel Metallic Crystal Black Pearl Basque Red Pearl II Obsidian Blue Pearl Toyota Camry: Super White Predawn Gray Mica Celestial Silver Metallic Cosmic Gray Mica Attitude Black Ruby Flare Pearl Parisian Night Pearl
3. Situational Influences
Purchase Environment Time Digital Environment Context
Four Targeting Strategies
Segments can be targeted in one of four ways: Undifferentiated: where the market is treated as a whole. Differentiated: where segments are separated and a unique product is tailored to each segment. Niche: where a small, but well-defined segment is the focus of a company's marketing efforts. Micro: where each individual is offered a customized solution, or product.
Product and Promotion Cont.
One Product / One Message: Global marketing standardization means developing a single product for all markets and promoting it the same way worldwide. However, even a same product/same message strategy may require changes to suit local needs. Product Invention: This refers to creating a new product or drastically changing an existing product. For example, consumers in different countries use products differently, requiring different product characteristics. Product Adaptation: Products, including packaging, are slightly altered to meet local conditions. Message Adaptation: The same basic product is maintained, but the promotional strategy is altered to position the product effectively in different countries. Promotion varies in different countries. Language barriers, translation problems, and cultural differences create headaches.
4. Micro Marketing Cont
One-size-fits all marketing no longer effective as direct and personal marketing will grow to meet needs of busy consumers Consumers will be loyal to companies that have earned—and reinforced—their loyalty Mass-media approaches will decline as technology allows better customer tracking Goal: increase share of the customer
4. Micro Marketing
One-to-one marketing which is individualized, information intensive, with a long-term perspective and goal of increasing customer loyalty. Ex: Chadwick's Custom Nike's
Internal Search
People first try to recall past experiences or knowledge regarding various purchase alternatives. Ex: Homer trying to pick out a donut
Influences in the Consumer Decision-Making Process
Personal--> Psychological--> Situational--> Social
Personality Symbol
Personality Symbol: Uses a character to represent the product. Ex: Geico gecko Fruity Loops bird Buzz the honey bee
Corporate Social Responsibility Cont.
Philanthropic Be a good citizen Ethical Do what is right Legal Obey the Law Economic Be profitable
Product Advertising
Pioneering: stimulates primary demand for new product or category Used in the PLC introductory stage Ex: 3D T.V. Competitive: influences demand for brand in the growth phase of the PLC Often uses emotional appeal Ex: IPod commercial of people dancing. Didn't need to be told that it places mpv. Comparative: compares two or more competing brands' product attributes Used if growth is sluggish, or if competition is strong Ex: Kid stepping on 2 coca-cola ads to reach the Pepsi button on vending machine
Global Marketing
Population 7.3 billion Languages >6,500 Average Income- $5,000 Countries- 195 Global marketing includes all marketing activities conducted at an international level by individuals or businesses.
Positioning
Positioning is the placement of a product or service offering in the minds of a selected target market
Market Response Cont.
Pre-promotion: Promotion: -Acquisition Rate -Displacement Rate Post-Promotion: -Conversion Rate
Contract Manufacturing (Entering the Global Marketplace)
Private-label manufacturing by a foreign country Ex: Apple products manufactured by China
Evaluate Alternatives
Process varies with product type -Careful, logical -Impulse -Seek advice Weight attributes--> Rank Brands
Global Marketing Standardization
Production of uniform products that can be sold the same way all over the world.
Pros and Cons of Advertising
Pros: -Cost-effective -Creative -Educate -Build dialogue Cons: -Unnoticed -Misinterpret -Intrusive -Offend
Going Global- Should We Go?
Reasons for going global.... 1. Offset sluggish economy in home market 2. Capitalize on market opportunities abroad 3. Directly compete with global competitors
Consumer Promotions
Rebates: $50 mail in rebate Coupons: Contests/sweepstakes: Safeway monopoly game Premiums: Gift with any purchase of $35 or more Loyalty Programs: Starbucks Reward Cards: Starbucks gold card Giveaways: Birchbox, Redbull
Market Response
Redemption rate: % responding to incentive Displacement rate: % of those who would buy anyway Acquisition rate: % of purchases by non-regular buyers Conversion rate: number of future purchases by new customers Product effects: the impact the promotions have on related products
Reminder Promotion (Goals and Tasks of Promotion)
Remind customers that product may be needed Remind customers where to buy product Maintain customer awareness Ex: Coca-Cola. Never talks about other brands. Happiness and togetherness
Consumer Beliefs
Represent the knowledge a consumer has about objects, their attributes, and their benefits provided Objective/subjective
Sales Promotion and Advertising Strategies
Sales Promotions -Consumer, Trade -Objectives -Market Responses Media Selection Advertising -Ratings vs. Share -Unique Selling Proposition Message Execution Marginal Analysis -Sales Response Functions Major Types of Advertising Alternative Advertising -Social Media Budget Approaches Scheduling
Sales Promotion Cont..
Sales Promotions--> (consumer and trade)
Global Marketing Standardization Examples
Same Message+ Same Product: Lays Classic Same Message+ Change Product: McCurry, Crispy Chinese sandwich Change Message + Same Product: Send kit kats for good luck on exams (Kit kat mail) Change message+ Change product: China's specialty beer
Product and Promotion
Same message + Same Product= One product, One message Same message + Change Product= Product adaptation Change message+ Same Product= Message adaptation Change message+ Change product= Product invention
STP Marketing
Segmenting: Divide market based on needs/benefits, demographics, lifestyles, behavioral measures Targeting: Select most appropriate market(s) Positioning: Target marketing messages through 4P's
2. Personal Influences
Self Identity Personality* Lifestyle* Age + Life Stage Vocation Affluence
Slice of Life
Slice of Life: Shows "real-life" people using a product in a normal setting - such as a family sitting at the dinner table, or... Ex: Tide Pods
Consumer Promotions Objectives
Stimulate Inquiries Generating Product Trial Encourage Repurchase Traffic Building Increasing Rate of Purchase
Measuring TV Audiences
Television Households -Number of HH that own a TV Program Rating -Percentage of TV HH tuned to a show -"Rating point" = 1 percent of TV HH Households Using TV (HUT) -Percentage of homes in an area watching TV at a given time Share of Audience -Percentage of HUT tuned to a show
Beyond the 4P'S
The 7 Ps: Product, Price, Place, Promotion, People, Physical, Process The 4Cs Model: Customer value, cost, convenience, communication
Budget Approaches
The Affordable Method: -What we have to spare. What's left to spend. Arbitrary Allocation Method: -No system. Seemed like a good idea at the time. Percentage of Sales Method: -Set percentage of sales or amount per unit. Competitive Parity Method: -Match competitor or industry average spending. Return on Investment Method: -Spending is treated as a capital investment.
Segmentation Base
The Segmentation Base is a group of characteristics that is used to assign segment members. *Not useful for most people--> just for the firm
Importance of Customer Satisfaction Cont.
The average business does not hear from 96% of its unhappy customers Complainers (unhappy people that tell you they are unhappy) are more likely to do business with you again than non-complainers (unhappy people that don't tell you they are unhappy). 54-70% if the complaint is resolved at all 95% if the complaint is resolved quickly
Sustainability
The idea that socially responsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profits and help the world at the same time.
Categorizing
Think about how we categorize and why To make... To make decisions easier Ex: Truck, motorcycles, bike, race car, mountain bike
Segmentation, Targeting and Positioning
Thoroughly explain the STP process Classify the four different segmentation bases Differentiate the four primary targeting strategies Comprehend positioning, repositioning, and perception concepts
Role of Marketing At the Corporate Level
To promote a culture of customer orientation and to be an advocate for the customer To assess market attractiveness To develop the firm's overall value proposition, the vision, and articulation of how it proposes to deliver superior value to customers
Product Advertising (Major Types of Advertising)
Touts the benefits of a specific good or service. Ex: Apple vs Microsoft ad
Trade Promotions
Trade: Trade shows Co-Op Advertising Sales Contests Training Trade Allowances Ex: Nissan's sales contest/Got wives/girlfriends involved. Giving away an experience
Environmental Consumers
Unconcerned- 17% (36 million) LOHAS- 19% (40 million) Naturalities- 19% (40 million) Drifters- 25% (53 million) Conventionals- 19% (40 million)
Classical Conditioning Process
Unconditioned Stimulus (food)--> Unconditioned response (saliva) Conditioned stimulus (bell)--> Conditioned stimulus (saliva)
Positioning Cont.
Unique Selling Proposition: -What does the brand stand for? -Why should they buy from me? -Whom am I trying to serve? Ex: McDonalds opens veggie restaurant in India Walmart, checkered floors, fluorescent lights vs. expensive shop with wood shelves, cushioned chairs and marble tiles.
United States Social Class
Upper class: 15% Middle class: -White-collar: 33% -Blue-collar: 32% Lower class: -Working Poor: 12% -Underclass: 8%
Attitude Change
Using TORA, we can see how we might affect attitudes Can focus on changing existing beliefs, evaluations of beliefs, normative beliefs OR, add new beliefs, normative beliefs (introduce peer pressure?)
2. Psychographic Segmentation
Values Lifestyle Personality Activities Interests Opinions
Executing the message contt.
Weber's law - the stronger the initial stimulus, the greater the added intensity needed to perceive a difference Differential threshold - just noticeable difference
Consumer Insight Cont.
What do customers think: ...about my brand? Competitor's brand? What do customers: ...buy my brand? What are: ...consumer expectations? The opportunities? The threats? How do customers: ...make brand choices?
Service Recovery
What do you do if something goes wrong? -Getting people to complain, 5- m 10% of dissatisfied customers choose to complain. What do you want as a customer? Effective resolution in the form of fair procedures/outcomes/interactions.
Bottom line...
When do attitudes predict behavior? Involvement/effort is high Knowledge is high Confidence is high Peer pressure is high
Customer Relationship Management
activities that are used to establish, develop, and maintain customer sales customizing product and service offerings based on data generated through interactions between the customer and the company Customer Relationships: Loyalty and Retention
Marginal Analysis
analysis that involves comparing marginal benefits and marginal costs
The Communication Mix
involves the various elements companies can use to communicate with the target market including advertising, public relations, sales promotion, and personal selling.
Marketing Information System
is a series of steps that include collection, analysis, and presentation of information for use in making marketing decisions. Internal company data, marketing research systems, decision-support data
Social Responsibility
is concern for how a person's (or company's) actions might affect the interest of others Organization, Society, People
Sales Promotion
is marketer-controlled communication to stimulate immediate audience response by enhancing the value of an offering for a limited time. Ex: Getting someone to buy something to buy something earlier
Customer Insight
is perceived meanings of data collected from the study of consumer behavior. Data--> Insight (Attract, Retain) Goal is to know what they think of us, why do they buy what they buy
Consumer Behavior
is the dynamic interaction of affect and cognition, behavior, and the environment in which human beings conduct the exchange aspects (product and service purchases) of their lives.
Public Relations
is two-way communication designed to improve mutual understanding and positively influence relationships between the marketer and its internal and external publics. Ex: Bored in the storm, come to our store 36-hour only. Taco-Bell "Thank you for suing us", lawsuit gets dropped "Will it kill you to say you're sorry?"
Media Selection
refers to the process of choosing which media types to use, when, where, and for what duration in order to execute a media plan.